BALTIMORE, MD (August 4, 1999) -- In previous columns, we've discussed the whats and the hows of a Beating the S&P (BSP) portfolio, but we've never really considered why anyone might choose to invest in such stocks. So without further ado, (and with apologies to certain late-night television fans), here are the top 10 reasons to invest in BSP:

10. It works. No matter how you slice this cake, investing in market-leading companies that pay high dividends has been shown time and again to beat the market in the long run. Whether it's O'Shaughnessy's exhaustive study of stocks since the early '50s, Dow high-yield returns since the Depression era, Foolish Four analysis covering more than 35 years, or the 12-year backtested returns for BSP (now confirmed by Elan Caspi using a slightly different set of stocks), the answer is always the same. These strategies have consistently been winners in the past, and there's no obvious reason why they shouldn't continue to outperform in the future.

9. Less than an hour of homework a year. One hallmark of BSP is its simplicity. Once the 30 BSP stocks are set for the year, check their yields and stock prices, and you're just about done. Now, with the Fool Stock Calculator, you can literally find the stocks in less time than it takes to make instant oatmeal.

8. Invest and forget. Once you've found your five BSP stocks, you're set for the year. No fuss, no muss. Relax. Read a good book.

7. Extra diversification. Many investors, especially those with larger portfolios, will feel more comfortable owning more than the four value stocks included in the Foolish Four. In a 20-stock portfolio, for instance, the Foolish Four stocks plus the five BSP stocks might make an excellent foundation on which to build a diversified collection of stocks. Add a few growth stocks, and you're set!

6. The stability of owning the "Blue Chips." Companies like Ford Motor(NYSE: F), Xerox(NYSE: XRX), and even recently maligned Campbell Soup(NYSE: CPB)rarely fade away to oblivion. When the markets turn sour, these companies (usually undervalued to begin with) may take a hit, but it's unlikely they'll face full-scale meltdowns. Confidence in the resilience of such large corporations allows investors to stick with the program, to not panic, and to maintain a long-term focus.

5. Intrinsic international exposure. Those who feel that there's more growth potential in overseas markets and are tempted to search for that killer international mutual fund might need look no further than BSP. Most of the BSP companies have achieved their status by building a global network. To name just two examples, Emerson Electric(NYSE: EMR) and Kimberly-Clark(NYSE: KMB) derived a significant portion of their sales from outside the U.S. -- 25% last year for Emerson and 44% for Kimberly-Clark.

4. High reward-to-risk profile. A strategy that can deliver high average returns with relatively small year-to-year variations in such returns is very desirable. The Sharpe Ratio is a standard way of calculating how a portfolio performs relative to its volatility -- the higher the ratio, the better. The BSP returns have among the highest Sharpe ratios of any value strategy tested thus far.

3. The benefits of dividends. Sure, the dividend yield of the average stock has been declining steadily this decade. Yes, dividends are taxed unfavorably compared to capital gains. But for retirees looking for steady income in a portfolio that will likely beat the market in the long run, BSP stocks just might fit the bill.

2. Avoid the "overpopularity" issue. The debate still rages as to whether Dow dividend investing or the Foolish Four has become so popular as to jeopardize future returns. I won't reopen that can of worms now. Suffice it to say, significant stock price movements involving Foolish Four companies have been noted to occur, specifically near the beginning of the year when many institutional unit investment trusts come on board. If you don't like running with the crowd, consider BSP.And finally, the number one reason to invest in a Beating the S&P strategy...

1. It works for you. No investment strategy will work for everyone, nor is any strategy necessarily appropriate for everyone. No one should invest in any group of stocks without a solid understanding of its risks, benefits, strengths, and weaknesses. Only by doing your homework and asking questions can you determine if BSP, or any investment for that matter, is right for you.

Fool on!

[Editor's Note: Following are the returns of a "paper" Beating the S&P portfolio that Ethan has been reporting on in the Foolish Workshop for many months. The stocks were selected December 31, 1998 and "purchased" in equal dollar amounts to be "held" for one year. To see a list of stocks for portfolios starting now, see Today's Stock Lists.]